Macrotech Developers IPO at 10% off – analysts recommend shareholders wait

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  • Marcotech Developers is now online on the list of exchanges with a share price of ₹ 436.
  • This is a 10.3% drop from the subscription price of ₹ 486 per share.
  • Ahead of the listing, the ₹ 2,500 IPO received a lukewarm reaction from investors, having been subscribed just 1.36 times.

Macrotech Developers, formerly known as Lodha Developers, saw its initial public offering (IPO) listing with a 10.3% discount on the National Stock Exchange (NSE). Its 10:00 a.m. share price at the time of listing was ₹ 436 against the subscription price of ₹ 486.

In the first 10 minutes, the price was able to peak at ₹ 472.95 before dropping back down to ₹ 458 at 10:10 a.m.

The company’s 2,500 crore initial public offering (IPO) received a lukewarm response from investors after seeing only a subscription rate of 1.36 times.

IPO of Macrotech developers Qualified institutional buyer Non-institutional investor Private Individual Investor Total
Number of times the number has subscribed 3.05 times 1.44 times 0.40 times 1.36 times

Analysts say the company is a good bet if you were willing to hold the stock for the long term – not for its quote premium. So if you have the shares and you are concerned that there has been a loss of premium, keep the shares if you have the patient.

Why are investors wary of Macrotech developers?
One of the reasons investors are wary is the company’s high level of debt. About 1,500 crore of IPO funds will go to pay off lenders to lighten its balance sheets. But that doesn’t mean it won’t need more money, which brings us to the second reason why investors were reluctant to put their money into the offering.

Publicity


Marcotech Developers operates in a capital-intensive sector, the real estate sector, during a pandemic. Any delay due to a foreclosure, curfew or the implementation of restrictions such as Section 144 could increase its costs – especially since the majority of its projects are taking place in India’s financial capital, Mumbai. The city was one of the worst affected in all of India during the second wave of the pandemic.

“If the company does not have access to the necessary funds on favorable terms, it may have to delay or abandon some or all of the planned projects or downsize the operations,” Capital Markets noted in its overview.

The brokerage said the company had previously struggled to repay its debt. She was among the companies that took advantage of the moratorium proposed by the Reserve Bank of India (RBI) for six months during the pandemic, from March to August 2020.

The size of Macrotech developers has its own flaws
The problem with Macrotech developers eventually having to scale down their scale of operations due to the uncertainty spread by the pandemic is that this is one thing it is playing in its favor.

Macrotech Developers is one of the biggest players in the Indian real estate market against behemoths such as Godrej Properties, Sunteck Realty and Oberoi Realty. And so far, it has consistently outperformed all its peers when it comes to sales, according to Hem Securities.

It has a strong distribution network, not only in India, but in overseas markets like UK, US, Singapore and the Gulf Cooperation Council (GCC).

But even this has its own flaws. “Large construction projects in all parts of the world present opportunities for corruption, fraud or improper conduct, including bribery, willful misconduct, theft or embezzlement by employees, contractors or officials. customers or the deliberate supply of poor quality materials, which may delay development. projects, ”the Capital Market report said.

Yes, it’s one of the biggest players in the residential real estate market, but being so big at a time when the real estate market is experiencing its biggest drop in five years can be dangerous – even with mortgage rates. on the decline.

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